(upbeat music) - Hey, everybody, non millionaire.

Myles Bess here.

(loud thumping) Host of Above the Noise.

Y'all saw what happened with Game Stop right?

Bananas!

- Game stops stock is surging.

- All we know is suddenly Game Stop is this hot stock.

- This Game Stock situation is the craziest I think I've ever seen.

- It grabbed my attention and I seriously considered buying in.

I was really, really close.

I had my stock trading app ready to go and then I quickly realized I don't know what the hell I'm doing, which maybe it was a good thing because I saw Game Stop shoot up, then crashed back down in just a matter of days.

- Game Stop shares tanking today.

- Shares in the U.S. company Game stock have fallen back sharply.

- Some people out there probably made a bunch of money off of it.

You know, they bought low and sold high, but I probably would've bought what $300 a share and lost money.

Why?

Let me repeat, I don't know what the hell I'm doing when it comes to investing.

So that's got me asking... How do you play the stock market and not lose?

If you went to an American public high school, like I did, you probably never were taught a thing about investing, the stock market, or Texas, or pretty much anything related to personal finance.

I had to learn all that stuff on my own but I did learn long division, which has been, you know really helpful and useful in my life.

Not.

Shout out to the American school system though.

(piano music) So let's start with some stock market basics.

A share of a stock is an ownership unit.

If you own a share of a stock in a company, that means you own a tiny piece of that company, and when I say tiny I mean tiny.

You could drop 130 bucks on a single share of Apple, but there's around 17 billion total shares of Apple in the world.

Look at Tim Cook.

He's the CEO of Apple.

He owns let's do the math here.

Okay.

Tim cook, Apple 837,000 shares of Apple which translates to about get the calculator out $108 million.

Not bad, Tim.

I bet Jeff Bezos is somewhere laughing from his super yacht with a helicopter landing pad and shark tank.

(evil laughing) (upbeat violin music) Companies sell stock so that they can raise money and people buy stock as an investment.

The hope is that over time the value of that share will increase so that it can be sold for profit.

When people talk about saving for retirement or they're freaking out about their 401k at work they're talking about building their wealth by investing, with stocks being a big part of that investment.

Buying and selling stocks has been a thing for centuries.

The first official stock exchange got a start an Amsterdam in the early sixteen hundreds.

The idea spread quickly, and the U.S. got in on the stock exchange in 1792 with the New York stock exchange.

Now New York remains the financial capital of the world.

That's where wall street is located.

You know, this eight block long street in the financial district in lower Manhattan.

That's where some of the world's biggest banks and financial firms have their fancy headquarters and that famous bull sculpture.

Yeah.

That's where that is.

Today, the U.S. has two major stock exchanges there's the New York Stock Exchange.

which is kind of like, you know the O G and includes companies, you know, like Walmart, Coca-Cola, Disney, and Johnson and Johnson.

And then there's the NASDAQ, which got its start in the 1970s.

Now there's a lot of tech companies in there.

So there's Apple, Amazon, Google, and Facebook.

Today, getting in on the stock market in theory is easier than ever before.

You just need some money and an internet connection and you can pretty much buy and sell stocks whenever you want, but buying stocks is the easy part.

Picking stocks that'll increase in value, now that's the hard part.

You often hear gambling terms when people talk about stocks.

You're gambling by placing a bet on a company that you think will rise.

And there is some truth to that.

You can absolutely lose money.

Investing is risky.

Now there are ways to lessen that risk.

You can do research and try to pick companies that you think will do well or you can do what a lot of experts recommended and avoid picking individual stocks, altogether.

Instead, you can invest in funds.

You might've heard of some, you know, there's index funds or mutual funds or exchange traded funds that composed of many different kinds of stocks from different companies So your financial fate, isn't tied to one specific company.

The risk is spread out more evenly.

Now, if you want more details on that stuff, check out our friends at 2 Cents, they know finance for sure.

And tell them Miles from Above the Noise sent you (bell dinging) So with the stock markets, the big takeaway is that you have to deal with uncertainty and risk.

Maybe you'll make money, maybe you'll make less money than you thought you were going to make.

Maybe you'll lose money, and if you've had money in the stock market for a while you've probably experienced all three of those things at some point.

So given all this, how do I best position myself for success in the stock market?

To figure that out I talked with Carmen Perez.

She's the creator of Make Real Cents, a millennial money platform that teaches the do's and don'ts of personal finance.

She worked on wall street for a while and says her thing is to make finance fun and not so overwhelming.

So like, what advice, you know, would you give a young person or, you know, to me, to be completely honest on like somebody who's just starting out, or just entering stock market, or just trying to, you know, get their feet wet.

- So as a beginner, where should you start when you start investing?

I like to go with the Warren Buffet, "invest in what you know", okay.

These are companies that have been tried and true.

They have been around for longer than we've been alive.

So companies like the Apple's of the world these are considered blue chip stocks.

So these are those solid brand names that everybody knows.

So maybe pick three or four different companies that you want to invest in, um, if you're going with single stocks.

If not, you can go with something like a mutual fund or an index fund that invests in a broad amount of different things.

So you don't have to worry about, okay should I invest in Apple?

I feel like I'm going to lose all my money.

Or if I invest in Coca Cola maybe it might not be a good bet.

Or if I invest in Disney, yada, yada, yada and then you just go from there.

You start learning, you start grinding, you Google and you start figuring out.

- So I've been on this journey myself in real time.

So this is really helpful for me.

But one thing that I'm still struggling with that you kind of talked about is, you know like that, that confidence, you know what I mean?

That I'm gonna like make money in the stock market.

You know, it feels like I'm gambling.

You know what I mean?

So what do you say to that?

- Oh no, for sure, for sure.

So again, like you have to like, keep it in your mind like when you invest, you are investing in a company that you believe in, that you think is going to grow for the longterm.

When you go to gamble, it's like, okay, I may or there's a 50-50 chance I'm walking away not being able to get this money back.

So it's like two completely different mindsets.

So regardless of maybe you might hear crashes or you might hear things like market correction the market's still here.

The market is still around, it's still driving.

It is bounce back every single time and there's data out there that actually shows that the market has been statistically up more than it's been down.

So once you like test the waters you can start building that confidence.

- Stock prices, rise and fall all the time, but stocks, tripling, or quadrupling and value then crashing back down in a matter of days is not the way things are supposed to work in the stock market.

Stocks are supposed to represent how healthy and profitable a company is or will be in the future.

Apple: they make a bunch of iPhones, right?

People buy them, Apple pocket's a bunch of money and the stock price creeps up as more and more people want the stock because the company is doing well.

That's capitalism, bro.

Now if people hate the next iPhone, and don't buy it, and Apple loses money, the stock price might go down, also capitalism, but that stuff takes, you know, years, decades when it doesn't work like that you get the Game top situation.

Oh man, like I said, bananas right?

On January 21st, Game Stop stock was trading at $43 a share just six days later, it jumped to $346 a share.

And by February 4th, it had fallen back down to $53 a share.

Now there's a bunch of specific reasons why that happened that we won't get into in this video, but still bananas.

Right?

What up everybody?

So today is March 8th and GameStop is being bananas again.

It was $46 a share on February 22nd and today it's $194 a share.

So who knows where it'll be by the time y'all are actually watching this.

All right now back to our regularly scheduled program.

And when enough stocks have a bad dip all at once you can have recessions or full blown depressions.

The most famous was the wall street crash of 1929.

That led to the great depression between 1929 and 1932 the stock market lost 90% of its value.

People saw their life savings basically get wiped out.

Tons of businesses closed, banks closed, millions lost their jobs.

The economy got screwed for like a decade.

More recently, we had the 2008 financial crisis AKA the great recession housing prices fail, millions can no longer afford their mortgages, foreclosed signs popped up all over the place, the stock market tanked and again, tons of businesses closed millions lost their jobs and the economy got screwed.

Does that sound familiar?

Because it kind of sounds like what the pandemic is doing to the economy right now.

Tens of thousands of businesses have closed, millions have lost their jobs, and 2020 ended up being the worst performing economy since the end of world war II.

And we're not out of the woods yet.

The pandemic might continue to hurt the economy for years to come, but the stock market actually finished the year at an all time record high.

Yes.

You heard that right.

The stock market finished 2020 at an all time record high.

It turns out the stock market doesn't equal the economy.

Let me repeat that for you all.

The stock market does not equal the economy.

Most private businesses and mom and pop shops have no connection to the stock market.

So all the corner stores in your city can go out of business and it's not going to affect the stock market.

You know what I mean?

And it's those kinds of businesses that get really hurt by the pandemic.

But the companies that drive the stock market you know, Apple, Google, Amazon they actually did really well.

It made a bunch of money during the pandemic.

You know, like everybody else my online shopping is streaming has been all over the place because I'm stuck in the house.

I've been looking at vintage t-shirts on eBay, I watched The Queen's Gambit like 50 times on Netflix, I basically live on zoom at this point, and tech companies are making bank off of it.

Basically, we have this big divide right between the actual economy on the ground and the performance of the stock market and that contributes to the even bigger problem of financial inequality in the U.S. You gotta be invested in the stock market to have any chance of making money from it, but to do that you gotta have money to spare to put into the stock market and that's not gonna happen if you're living paycheck to paycheck.

So that kind of gets me back to like, you know thinking that the stock market is kind of like this rich man's game, you know what I mean?

So it's like, how do we, cause it's like going I was going to school they weren't talking to us about stocks.

They weren't teaching us that type of stuff.

You know, it was whether it was about history and just geometry and stuff like that.

So how do we get like, you know, Black and Brown folks and other groups that are, you know, typically under invested or just not invested in the market at all?

Like how do we get them to participate in the game?

- It's designed that way for a reason, um, especially till lockout marginalized groups.

So I think we just have to start the best way to do that is by setting aside money, getting on a budget, and making sure that you're investing not only for you but understanding your why, and for a lot of Black and Brown people, that why is their family.

They need to start creating generational wealth and the best way I think that we could do that is by getting into the stock market, getting into all these areas and being curious about why we're not taught certain things.

- In the U.S. around half of Americans own stock, but it's mostly through retirement accounts that they get from their jobs.

Only 14% directly own individual stocks.

So like, you know, directly buying and selling Apple stock like we were talking about earlier and families headed by White adults are more likely than those headed by Black or Hispanic adults to be invested in the stock market.

Check out these numbers.

60% of white households are invested in the stock market.

Compared to only 31% of black households and 28% of the hispanic households, and check out how much money people have in the stock market.

Family is making between 35K and 53K typically have around 12,000 bucks in the market.

Families making between 53K and 100K have around $26,000 in the market.

For families making over 100K it's $138,000 pretty big differences, right?

So the record setting stock market in 2020 it made the rich a whole lot richer.

Now you gotta have money to make money, right.

But for everybody else, 2020 definitely sucked.

But it's the new year now with new possibilities.

So what do you all think?

If you had the money would you invest it in the stock market?

If not, what's holding you back?

Let us know in the comments below.

As always I'm Myles Bess till next time.

Peace out.

(upbeat music)